Can ATMs save Apple Pay?

It must be some kind of perverse reality we live in where older payment methods and facilities, rather than fading away, are actually going from strength to strength and newer digital alternatives are struggling to gain traction.

Holding out for a hero

It has not been a great start to 2016 for Apple. It has been toppled by Google’s parent company, Alphabet, as the world’s biggest company, revealed that iPhone sales have dropped for the first time in a long time and still struggles to convince people to use its mobile payment service. In Canada, famously a very digitally-savvy country, mobile payments only account for three per cent of all transactions. In October, research cast doubt on Tim Cook’s proclamation that 2015 would be ‘the year of Apple Pay’ by indicating that Apple Pay growth has stagnated. Apple Watches, with their NFC capabilities, have almost certainly failed to set the world alight. Clearly people are struggling to see how mobile is more convenient than other equally modern methods such as contactless cards.

Could Apple, in a bid to boost Apple Pay, turn to older payment facilities? It would seem so, according to reports from Wired US, JP Morgan Chase is planning to roll-out cardless ATMs that will work with smartphones. But why on earth something as digitally innovative as mobile payments would want to rely on a hole-in-the-wall that is merely an automated cash dispensary?

Because it’s so much more than that.

Protean ATMs

When digital payments first became truly exciting with the introduction of contactless cards and mobile payments, it was a natural to assume that cash would be displaced – after all newer payments had the convenience factor. Whilst cash usage dropped, news of its demise were greatly exaggerated. One of the ways to check the pulse of cash is to check how ATMs are doing. In September, figures from Link, the cash machine network, revealed that the number of ATMs in the UK reached 70,180 in July, surpassing 70,000 for the first time. Skip to 2016 and research from RBR, global ATM cash withdrawal shows that volumes grew by 7 per cent in 2014 with a total of 92 billion withdrawals made. That figure is predicted to jump to 104 billion withdrawals at the end of this year, and 128 billion by 2020.

I explained last year how ATMs have thrived in the face of growing and seemingly threatening innovations precisely because they learnt to work symbiotically with them: when Bitcoin was all the rage (it looks like it has been ironically supplanted by its own underlying technology, Blockchain) all of a sudden there were Bitcoin ATMs. When personal finance management became a hot topic, banks like Barclays rolled out special ATMs that allowed one to manage their finances on them. The same goes for biometric technology.

The introduction of a network of smartphone compatible ATMs, could be for Apple Pay what TfL’s network was for contactless cards (but amusingly, not for Apple Pay). Contactless cards became a huge hit in the UK because TfL provided contactless cards with a well-established and trusted network of facilities – you knew exactly where each contactless-enabled terminal was.

ATMs in the US could do that for Apple, especially since one of the main reasons people were worried about using mobile payments is that they are not sure of where they will and won’t be accepted.

Smartphone-compatible payment terminals have already been rolled out in the US, with the likes of PayPal Here, but again that requires customers to know 100 per cent that stores use them, a network of advanced ATMs is a whole new level.

But…

These ATMs will be NFC enabled, and although it is not yet clear whether they will immediately work with cards, it is a distinct possibility that they could also work with contactless cards – maybe not immediately, but at the least in the very near future. If that happens, could we be in line for history repeating itself with these ATMs proving to be a much bigger hit with cards than phones or will the fact that mobiles have the extra level of biometric security finally put it in a much stronger position?

However, even if this happen and fails to kickstart mobile payments, it is still improving their area of acceptance, which can only ever be a good thing.

I caught up with Guillaume Andre, Head of Marketing, Ingenico Northern Europe, to discuss the implications of a tech giant-payments provider collaboration-led future, and how Ingenico and Google might continue to innovate the POS system in the future.

The future is even closer than we think. The increasing pace of technological change means concepts formerly considered only abstract theories on a distant horizon are already nearly upon us. By Urs Gubser, Head E-Commerce, SIX Payment Services.

“The smart terminal has moved beyond just accepting payments", said Patrice Le Marre, EVP of the Banks & Acquirers Business Unit at Ingenico Group, said of the world's first Google Mobile Services and PCI-PTS v5 certified terminal.

Leave a comment

R Baldwin

in February 4th, 2016 @ 15:15

So, a person is supposed to pull out their phone, access their account at the ATM, then put away their phone to pull out their wallet to put the cash away? Just because you can do something doesn’t make it make sense; if I am going to an ATM I am happy to pull my card out of my wallet (perhaps use it contactless, avoids skimming) and then put the money into the wallet.

Ben Rabinovich

in February 4th, 2016 @ 17:24

That’s a really good point. I think it’s one of those instances where it’s easier to get behind a trend than not, especially when it can make ATMs more accessible by adopting new tech. But I also agree with you, it seems like ATMs that work with contactless cards could be a much bigger hit given it will involve less friction/ already involves you taking out your wallet.